F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

A B D U L K

A D I R M O H A M E D , individually and on behalf of all others similarly

situated, Plaintiff-Appellee

,

v

.

U B E R T E C H

N O L O G I E S , I

N C .; R A S I E R , L L C, Defendants-Appellants

,

and

H I R E A S E , L L C, Defendant. No. 15-16178

D.C. No. 3:14-cv-05200-EMC

R O N A L D G I L L E T T E , Plaintiff-Appellee

,

v

.

U B E R T E C H

N O L O G I E S , I

N C ., D efendant-Appellant. No. 15-16181

D.C. No. 3:14-cv-05241-EMCM O H A M E D V

. U B E R T E C H N O L O G I E S 2

A B D U L K

A D I R M O H A M E D , individually and on behalf of all others similarly

situated, Plaintiff-Appellee

,

v

.

U B E R T E C H

N O L O G I E S , I

N C .; R A S I E R , L L C, Defendants

,

and

H I R E A S E , L L C, D efendant-Appellant. No. 15-16250

D.C. No. 3:14-cv-05200-EMC

ORDER AND AMENDED OPI NI ON

A ppeal from the United States District Court for the Northern District of California Edward M. Chen, District J u dg e, Presiding

Arg ued and Submitted J une 16, 2016 San F rancisco, California

F iled September 7, 2016 Amended December 21, 2016

B e fore: Richard C. Tallman, Richard R. Clifton, and

Sandra S. I kuta, Circuit J udg es.

Order; Opinion by

J udg e CliftonM O H A M E D V

. U B E R T E C H N O L O G I E S 3

SUMMARY *

Arbitration / Calif

ornia P rivate Attorney G eneral Act

The panel affirmed in part and reversed in part the district court’s orders deny ing Uber Technolog ies, I nc.’s motion to compel arbitr a t i o n in actions broug ht by two former Uber drivers, Abdul M o h a m ed and Ronald Gillette, o n behalf o f themselves and a proposed class of drivers, and remanded for further proceeding s.

The dis t r i c t court d enied Uber’s motion to c ompel arbitration of the plaintiffs’ claims.

The panel held that the district court erred in assuming the authority to decide w hether the parties’ arbitration
ag reements were enforceable. The panel further held that the
q u e s t i o n of arbitrability as to all but Gillette’s California Private Attorney General Act (“PAGA”) claim was deleg ated to the arbitrator. The panel also held that under the terms of
t h e ag reement Gillette sig ned, the PAGA waiver should b e severed from the arbitration ag reement and Gillette’s PAGA claim may proceed in court on a representative b a s i s

. The panel a lso h eld that all of plaintiffs’ remaining arg uments, including both Mohamad’s challeng e to the PAGA w a iver in the ag reement he sig ned and the challeng e by both plaintiffs
to the validity o f the arbitration ag reement itself, were subject to resolution via arbitration.

* T h is su m m ary co n stitu

tes n o part o f th e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.M O H A M E D V

. U B E R T E C H N O L O G I E S 4

The panel affirmed t h e district court’s order deny ing the motion to compel a

rbitration f

iled b y H i r e ase, L L C, an independent backg round-che ck company that Mohamed named in his complaint a long side Uber. The panel h eld that Hirease was n ot entitled to compel arbitration as Ube r’ s ag ent.

COUNSEL

Theodore B outrous, J r. (arg ued), Thea n e D

. Evang elis, a nd B randon J

. Stoker, Gibson, Dunn & Crutche r L L P, L os Ang eles, California; J o shua S. L ipshutz and K evin J

. Ring

Dowell, Gibson, Dunn & Crutcher L L P, San F rancisco, California; Rod M. F lieg e l, L i ttler Mendelson P.C., San F rancisco, California; Andrew M. Spurchise

, L ittler Mend elson P.C., New York, New York; for DefendantsAppellants Uber Technolog ies, I nc. and Rasier, L L C.

Pamela Devata (arg

ued) and Nicholas R. Clements, Sey farth Shaw L L P, San F rancisco, California; Tim o t h y L

. Hix

, Sey farth Shaw L L P, L os Ang eles, California; for D efendantAppellant Hirease, L L C.

L aura Ho (arg

ued), Andrew P. L ee, and W ill i a m J haveriW e e ks, Goldstein B o r ge n Dardarian & Ho, Oakland, California; Robert Ahdoot, T i na W o lfson, and Theodore May a, A hdoot & W olfson, PC, W est Holly wood, California; Mere d i t h D e s a u t els, Dana I saac Q uinn, and Elisa D ella-Piana, L awy e rs’ Committee f

o r Civil Rig h ts o f the San F r ancisco B ay A rea, San F rancisco, California; Monique O livier, Duckworth Peters L e b o w i tz O livier L L P, San F rancisco, California; for Plaintiffs-Appellees.M O H A M E D V

. U B E R T E C H N O L O G I E S 5

Kevin Ranlett, Archis A. Parasharami, Eva n M. Tag er, a nd Andrew J

. Pincus, May er B rown L L P
, W ashing ton, D.C.; W a r ren Postman and Kate Comerford T odd, U.S

. Chamber L itig ation Center, I nc., W ashing ton, D.C.; for A micus Curiae Chamber of Commerce of the United States.

Matthew C. Koski, N ational Employ ment L awy ers Association, Oakland, California; David H. Sel i gm an, Towards J u stice, Denver, Colorado; J ahan C. Sag afi, Outten & Golden L L P, San F rancisco, California; f or Amici Curiae National Employ

ment L aw Pro

ject, National Employ

ment L awy e rs Association, National A ssociation of Consumer Advocates, and Towards J ustice.

ORDER

The opinion f

iled o n September 7, 2016, is h er eby amended as follows:

1. On pag e 18 of the slip opinion, in footno t e 6, the last sentence (and related citations) should be deleted.

W e note that Plaintiffs also raised the
arg ument t hat the class a nd collective action waivers in t h e arbitration a g reements may violate the N ational L abor Relatio n s A ct (NL RA) for the first time in a sur-reply

. That untimely submission w aiv ed the arg ument. See, e.g ., United S tates v. Dreyer
, 804 F .3d 1266, 1277 (9th Ci r. 2 015) (“Generally

, an appellee waives any a

rg ument it fails to raise in its answering brief.”).M O H A M E D V

. U B E R T E C H N O L O G I E S 6

W ith this amendment, t h e panel has voted to deny the petition f or rehearing en banc. The Petition for Rehearing E n B anc ha s b ee n circulated to the full court, a nd no judg e has requested a vote o n whether to rehear the matter en banc. F ed. R. App. P. 35.

T h e p etition rehearing en banc is D ENIED

. No furthe r petition for rehearing

may be filed.

OP INION

CL I F TON, Circuit J udg e :

Plaintiff-Appellees Abdul Mohamed and Ronald Gillette, former Uber drivers, filed an action in district court alleg ing

on behalf of themselves and a proposed c lass o f other drivers that D efendants Uber Technolog ies, I nc., Rasier, L L C, a nd Hirease, L L C, violated the F air Credit Reporting Act (F CRA) and v arious state statutes. Gillette has also broug ht a representative claim ag ainst Uber under California’s Private Attorney s G eneral Act of 2004 (PAGA) alleg ing that he was

m i s classified as an independent contractor rather than an employ e e. The district c o urt denied Uber’s motion to c ompel arb i t r a t ion o f the claims. Mohamed v. Uber Technologies

, 109 F

. Sup p

. 3d 1185 ( N.D. Cal. 2 015). Uber arg ues on appea l ( 1 ) that the district court erroneously considered

w h e ther the a

rbitration p rovisions were enforceable when tha t question was clearly deleg ated to an a rbitrator, and (2) that

even if th e d i strict court properly considered arbitrability

, it erred in concluding that the arbitrat i o n p rovisions were invalid and in declining to compel arbitration.M O H A M E D V

. U B E R T E C H N O L O G I E S 7

W e conclude that the district c ourt e r r e d at the first step and improperly assumed the authority to decide whether t h e arbitration a g reements w e re e nforceable. The question o f arbitrability a s to all but Gillette’s PAGA claims was deleg ated to the arbitrator. Under the terms of the ag reement Gillette sig ned, the PAGA w aiver should be severed from the arbitration ag reement and Gillette’ s P AGA claims may procee d in c ourt on a representative basis. All of Plaintiffs’ remaining arg uments, including both Mohamed’s c h a lleng e to the PAGA waiver in the agreement he sig n e d a nd the challeng e by both Plaintiffs to the validity of the arbitration
ag reement itself, are subject to resolution via arbitration.

I. Background

Plaintiff Abdul Mohamed beg an driving for Uber’s black

car service in B oston in 2012, and f or UberX 1 around October 2014. L ike a ll Uber drivers, Mohamed used a smartphone to

access the Uber application while driving

, which enabled him to pick up customers.

I n late J uly 2013, Mohamed was required to ag ree to two

new contracts with Uber (the “Software L ic e n s e and Online Services A g r e ement” a

nd the “Driver Addendum”; jointly

, the “2013 Ag r eement”) before he was allowed t o s i g n in to the a pplication. The 2013 Ag reement provided t h a t i t was g overned by California law. I t included an arbitration
pr o vision requiring U ber drivers to submit to arbitration to resolve most d isputes w ith the c ompany

. I t a lso included a

1 A n Ub er b lack car is a co m m erciall y reg istered l iv ery car th at p assen g ers can access u sin g th e Ub er sm artp h o n e ap p licatio n . Ub erX is

a lo w er- co st alte r n a t iv e in w h ich d riv ers u se th eir o w n cars to p ick u

p p assen g ers v ia th e ap p

.M O H A M E D V

. U B E R T E C H N O L O G I E S 8

provision requiring d r i v ers to waive their rig ht to bring disputes as a class action, a c ollective action, or a p r i vate attorney g e neral representative action. Drivers could opt out of arbitration by delivering n o tice of their intent to opt out to Uber within 30 day s e ither in person or by overnig ht delivery service. Mohamed a ccepte d the a g reements and did not opt out.

Nearly a y ear later, in J une 2014, Uber releas e d an updated version o f the Software L icense and Online Services Ag reement and the Driver A ddendum ( j o i ntly

, the “2014 Ag reement”). The 2014 Ag reement also provided that it was g overned by California law. I t included an upd a ted

a r b i tration provision with an easier opt-out procedure th at enabled d rivers to op t out via e-mail as well as in person o r by delivery service. I t also included a provision requiring all disputes with the c ompany “to be resolved o nly by an arbitrator throug h final and binding arb itration on an individual basis only

, and not by way of court or jury trial, o r by way of class, collective, or representative action.” Mohamed accepted these a g reements a nd did not opt out. I n early October 2014, Mohamed accepted a similar ag reement with Ra s i e r , a wholly owned subsidiary of Uber ( “Rasier Software Sublicense & Online Services Ag reement” (Rasier Ag reement)). 2

I n late O c t o b e r 2014, shortly after he beg an driving for UberX, Mohamed’s access to th e a pp was c ut o f f due to

2 Ex cep t w h e r e n ecessary , t h is o p in io n ref

ers to U b er an d Rasier

co llectiv ely as “ Ub er.” T h e Rasier A g reem en t co n tain ed term s s im ilar to th o se in th e So f

tw are L icen se an d On l in e S erv ices A g reem en t, an d n eith er p arty h as alleg ed an y arg u m en ts sp ecif ic t o th e R asier A g reem en t. T h u s,

w e treat it as p art o f

th e 2 0 14 A g reem en t.M O H A M E D V

. U B E R T E C H N O L O G I E S 9

neg ative information on his consumer credit r e p ort, effectively

terminating his ability

to drive for Uber.

P l a i n t i f f

- A p p e l l a n t R o nald G illette beg an driving for U b e r in the San F rancisco B a y Ar e a i n M a rch 2013. L ike Mohamed, he was required to ag re e to the 2 013 Ag reement before sig ning into t h e Uber application in late J uly 2013. Also like Mohamed, he di d n o t o p t out. I n April 2014, Gillette’s access to the app was cut o ff because of neg ative information on his consumer credit report. This effectively terminated his relationship with Uber.

On November 24, 2014, Mohamed filed a class a ction in the Northern District of California ag ainst Uber, Rasier, and Hirease, a n independent c ompany that conducted backg r ound checks. Mohamed alleg e d that the use of his consumer credit report v iolated the F CRA, the Massachuset t s Consumer Cred i t Reporting Act (MCCRA), a nd the California Consumer Cr e d i t Reporting Ag encies Act (CCRAA). Two day s later, on November 26, 2014, Gille t t e f iled a separate lawsuit a ga inst Uber, also in the Northern D istrict o f California. Gillette alleg ed tha t the company ’s use of his

consumer credit r eport violated the F CRA and the California I nvestig ative Consumer Repor t i ng Ag encies Act (I CRAA). He also alleg ed that Uber had misclassified him and other employ e es as independent contractors in violation o f California’s PAGA statute.

Uber moved to compel arbitration in b o t h lawsuits,
arg uing that Gillette was bound by the arbitration p ro v i sion in the 2 013 Ag r eement and Mohamed by th e a r b itration
pro v i s i o n in the 2014 A g r eement. The district court denied both motions, Mohamed , 109 F . Supp. 3d at 1190, and Uber now appeals.M O H A M E D V

. U B E R T E C H N O L O G I E S 10

II. Discussion

W e review de n ovo an order deny ing a motion to c ompel arbitration. Oracle Am., Inc

. v

. M y riad Grp. A.G.
, 724 F .3d 1069, 1072 (9th Cir. 2013).

B o th the 2013 and the 2014 Ag reements contained provisions that provided, using very similar lang uag e, that disputes would be resolved by arbitra t i o n and, further, that
any dispute a s to arbitrability (with one ex ception disc u s s e d below) would be resolved by the arbitrator. These provisions stated:

Ex cept as i t otherwise provides, this Arbitration Provision is intended to apply to the re solution of disputes that otherwise would be resolved in a court of law or before

a forum other than arbitration. This Arbitration Provision requires all such disputes to be resolved only by an arbitrator throug h final and binding arbitration and not by way of court or jury

trial. 3

Such d isputes include w ithout limitation disputes a

rising out o f or relating to interpretation or application o f t h i s A r b i t r ation P r o v ision, including the en f o r c e a b i l i t y , revocability or valid ity of the Arbitration

3 In th e 20 1 4 A g reem en t, th is sen ten ce read : “ T h is A rb itratio n P ro v isio n req u ires all su ch d isp u t es to b e reso lv ed o n ly by an arb itrato r th ro u g h f in al

an d b i n d in g arb itratio n o n an in d iv id u al b asis o n ly an d n o t b y w ay o f co u rt

o r j u ry trial, o r b y

w ay o f class, co llectiv e, o r rep resen tativ e actio n

.M O H A M E D V

. U B E R T E C H N O L O G I E S 11

Provision or any portion of the Arbitration Provision.

The 2014 Ag reement continued: “All such matters sh all be decided by

an Arbitrator and not by a court or judg e.”

B o th the 2013 a

nd 2014 Ag reements a l s o contained provisions that required drivers to waive t h e rig h t to bring class, collective, and representative actions (including c laims under the PAGA statute), either in court or in arbitration. The 2013 Ag reement, but n ot the 2014 Ag reement, c a rv ed out challeng es to these waivers from the g eneral deleg ation provision: “Notwithstanding any other clause contained in this Ag reement, any c laim that all o r part of the Class Action W a iver, Collective A ction Waiver or Private Attorney General W a iver is invalid, unenforc e able, u nconscionable, void or voidable may be determined o n l y b y a court o f competent jurisdiction and not by an arbitrator.”

The district court concluded that the deleg ation clauses in both th e 2 0 1 3 and the 2014 Ag r eements were ineffective be ca u se they were not clear and unmistakable. Mohamed

, 109 F

. Supp. 3d at 1198–1204. The court also concluded that

even if the deleg ation clau s es w ere clear and unmistakable, they were unenforceable because they were unconscionable. Id. at 1204–16. W e disag r ee. The 2013 Ag ree m en t clearly and unmistakably deleg ated the question of arbitrability to the arbitrator ex cept as pertained to the arbitrability of class action, collective action, and representative claims. The 2014 Ag reement c learly and unmistakably deleg ated the question of arb i t r ability to the a

rbitrator under all circumstances. Neither deleg ation provision was u nconscionable. Thus, all of Plaintiffs’ challeng es to the enforceability of the arbitration
ag reement, save Gillette’s challeng e to the enforceability o fM O H A M E D V

. U B E R T E C H N O L O G I E S 12

the PAGA waiver in the 2013 Ag reement, should have been adjudicated in the first instance by an arbitrator and not in
court.

A. Delegation of the issue of arbitrability

“[ U] nlike the arbitrabilit y o f claims in g eneral, whether the court or the arbitrator decides arbitrability is ‘an issue for judicial determination u n less the parties clearly and unmistakably provide otherwise. ’” O racle Am.
, 7 24 F

. 3d at 1072 (quoting Howsam v

. D ean W itter Reynolds, Inc.
, 537 U.S. 79, 83 (2002)). “I n other words, t h e r e i s a presumption that courts will decide which issues a r e arb i t r able; the federal policy in favor of arbitration does not

ex tend to deciding questions of arbitrability

. ” Id. Clear a nd unmistakable evidence of an ag reement to a r bitrate arbitrability “mig ht include

. . . a c ourse of conduct demonstrat i ng assent

. . . o r

. . . an ex press ag reement to do so.” Momot v. M

astro , 652 F .3d 982, 988 (9th Cir. 2 011) (quoting Rent-A-Ctr., W

., Inc. v. J ackson

, 561 U.S. 63, 79–80 (2010) (Stevens, J ., dissenting )).

I n M omot , we h eld that lang u ag e “deleg ating to t h e arbitrators the authority to determine the validity o r application of any of the provisions of the arbitration clause[ ] constitutes an ag reement to arbitrate thre s h o l d issues concerning the arbitration a g reement.” Id. (quoting Rent-ACtr.
, 561 U.S. at 68) (internal quotation marks o m i t t ed). Here, both th e 2 0 1 3 and the 2014 Ag reements deleg ated to the arbitrators the author ity to decide issues relating to the “enforceability

, revocability o r validity of th e A rbitration Provision or any portion of the Arbitration Provision.” This lang uag e is similar to but more ex p ansive than the lang uag e at issue in Momot
, and t h u s a l s o “clearly and unmistakablyM O H A M E D V

. U B E R T E C H N O L O G I E S 13

indicates [ the parties’] intent for the arbitrators to decide the threshold question of arbitrability .” Id. 4

The district court determined that the dele gation
p r o v i s i o ns themselves were “unambig uous,” but i t nonetheless held that they conflicted with venue provisions elsewhere in the 2 013 and 2014 Ag reements. Mohamed

, 109 F

. Supp. 3 d a t 1199. B oth v enue provisions stated that “any disputes, actions, claims, or causes of action a rising out of or in connection with this Ag r eement or the Uber Service

or Software shall be subject to the e x clusive jur i s d iction o f the state and federal courts located in the City and County o f San Fr ancisco.” The district court concluded that the lang uag e in the venue p rovisions g ranting st a te or federal
courts in San F rancisco “ex clusive jurisdic t i o n ” over “any disputes, actions, claims or c auses of action arising out of or in connection with this Ag reement” was “inconsistent and in considerable tension with the lang uag e of the deleg ation clauses, w hich provide[ d ] t h a t ‘without limitation’ arbitrability will be decided by an arbitrator.” Id. a t 1 201. The cou rt also identified an inconsistency between the “without limitation” lang uag e and the carve-out provision in the 2 0 13 Ag reement g ranting courts jurisdiction over challeng es to the PAGA waiver. Id. at 1201–02.

These conflicts are artificial. T he clause describing the
scope of the arbitration provision was p refaced with “ [ e ] x cept

as it otherwise provides,” which eliminated the inconsistency

4 T h e a r b i t r a t io n ag reem en ts m ay n ot h av e clearly an d u n m i stak ab ly d eleg ated to th e arb itrato r t h e au th o rity t o decid e th e q u es t i o n o f w aiv er b y l itig atio n co n d u ct. S

ee Ma rtin v. Ya s u d

a , N o

. 1 5

- 5 5 6 9 6
, 2 0 1 6 W L 3 9 2 4 3 8 1 , at * 5 (9 th

Cir. J u ly 2 1
, 2 0 1 6 ). B u

t th at q u estio n

is n ot at issu e in th is litig atio n

.M O H A M E D V

. U B E R T E C H N O L O G I E S 14

between the g eneral d e l e g ation provision and the specific
carve-out in the 2013 Ag reement. As for the v enue provision, the California Court o f Appeal has observed that “[ n ] o matter how broad the arbitration clause, it m a y be necessary to file

an action in court to enforce a n arbitration a g reement, or to obtain a judg ment enforcing an arbitration award, and the parties may need to invoke t h e j u r isdiction of a court to obtain o t h e r remedies.” Dream Theater, Inc. v. Dream Theater

, 21 C a l

. Rptr. 3d 3 22, 328 (Cal. Ct. App. 2004), as modified on denial o

f reh’g (Dec

. 2 8
, 2004). I t is apparent that the venue provision here was intended for these purposes, and to identify the ve n u e f o r a ny o ther claims that were not covered b y the arbitration a g reement. That does n o t conflict with or undermine t h e ag reement’s unambig uous statement identify ing arbitrable claims and arg uments.

The deleg ation provisions clearly and unmistakably deleg ated the question of arbitrability to the arbitrator for all claims ex cept challeng es to the c lass, collecti v e , and representative action waivers in the 2013 A greement. I n accordance with Supreme Court p recedent, we are required to enforce these ag reements “accordi n g to their terms” and, in the abs e nce of some other g enerally applicable contract defense, such as fraud, duress, or unconscionability

, let an arbitrator determine arb i t r a bility as to all b u t the c laims specifically

ex empted by

the 2013 Ag reement. Rent-A-Ctr.
, 561 U.S. at 67.

B. The delegation provisions were not unconscionable

The district c ourt also held that, even if the del egation provisions were clear and unmi s t a k able, they w ere both unenforceable due to u nco n s cionability

. Mohamed

, 109 F

. S u p p

. 3 d a t 1 2 0 4

– 1 6

. U n d e r C a l i f o r n i a l a w ,M O H A M E D V

. U B E R T E C H N O L O G I E S 15

“‘unconscionability has both a ‘procedura l ’ a nd a ‘substantive’ e lement,’ the former focusing on ‘oppression’

or ‘sur prise’ due to unequal barg aining power, the latter on ‘overly harsh’ or ‘one-sided’ results.” Armendariz v. Found. Health Psychcare Servs., I nc. , 6 P.3d 669, 690 (Cal. 2 0 0 0 ) (quoting A & M Produce Co. v. FM C Corp.
, 186 Cal. Rptr. 114
, 1 2 1

– 2 2 (Cal. Ct. App. 1 982)). B oth substantive a nd procedural uncon scionability must be present in order for a court to find a contract unconscionable, but “they n eed not be present in the same deg ree.” Id. Recently

, the California Supreme Court has emphasiz ed that “unconscionability requires a substantial deg ree of unfairness beyond ‘a simple

o l d

- fashioned bad bargain .’” Baltazar v. Forever 2 1, Inc.
, 367 P.3d 6
, 12 (Cal. 2016) (quoting Sonic-Calabasas A, Inc.

v. Moreno
, 311 P.3d 18 4
, 2 9 1 (Cal. 2013)). Rather,

un co n scionable contracts are those that are “so one-sided a s to ‘shock the conscience.’” Id. at 1 1 ( quoting Pinnacle Museum Tow e r Assn. v. Pinnacle Mkt. Dev. ( US)

, LLC
, 2 8 2 P

. 3d 1217, 1232 (Cal. 2012)). W hen considering an unconscionability challeng e to a delega t ion provision, the
court must consider only arg uments “specific to the deleg ation provision.” Rent-A-Ctr. , 561 U.S. at 73

The d istrict court c o nclude d t h a t t he deleg a tion provisions in b oth the 2013 and 2014 Ag reements were procedurally a nd substantively u nconscionable. F or the 2 013 Ag r eement, the
court concluded that the p r o v ision was procedurally unconscionable because it was “hidden in a prol i x printed form,” Nagrampa v. MailCoups, I nc. , 4 6 9 F. 3 d 1257, 1280 (9th Cir. 2006) (en banc) ( quoting Flores v. Tran s a m erica HomeFirst, I

nc. , 113 Cal. R p t r

. 2 d 376, 381 (Cal. Ct. App. 2001)), and because there was no meaning ful opportunity for the drivers to reject the contract. Mohamed

, 109 F

. Supp. 3d
at 1205–06. F or the 2014 Agreement, the court concludedM O H A M E D V

. U B E R T E C H N O L O G I E S 16

t h a t t h e d e l e g a t i o n p r o v i s i o n w a s p r o c e d u r a l l y unconscionable because “the 2014 a g reement[ ] utterly failed
t o notify drivers of a specific drawback of the deleg at i o n clause—namel y , that d rivers may be required to pay

c onsiderable forum fees to arbitrate arbitrability ,” a n d because employ ees like l y f elt at least some pressure not to opt out of arbitration despite the presence of a clear opt-out provision. Id. at 1 215–16. The c o urt also conclu ded that both the 2013 a

nd 2014 Ag reements were substantively unconscionable because they required a rbitration c o s ts a

nd fees to be shared equally between Uber a nd the driver. Id. at 1206–10, 1216. As a result, it concluded that both deleg ation provisions should be invalidated. Id. at 1210, 1216.

Uber arg ues that the deleg ation provisions could not have been p rocedurally unconscionab l e because both ag reements g ave drivers an opportunity to o pt o ut of arbitration altog ether. The district court ag reed with Uber tha t , u n d e r Ninth Circuit precedent, “the ex istence of a meaning ful rig ht
to o pt-out o f [ arbitration] necessarily r enders [the arbitration clause] (and the deleg ation clause speci fically ) procedurally conscionable as a matter of law.” I d. at 1 212. A s to the 2013 Ag reement, the court concluded that the rig ht to opt o ut was not “meaning ful” because drivers were requi re d t o opt out either in person at Uber’s San F ran c i sco offices or b y overnig h t delivery servic e , b oth of which were so burdensome a s to make the opt-out rig h t “illusory .” Id. at 1206. As to the 2014 Ag reement, w h i c h c ontained a much less burdensome opt-out proce d u r e, the court held that our precedent “failed to a

pply California law as announced b y theM O H A M E D V

. U B E R T E C H N O L O G I E S 17

California Supreme Court,” and as such, declined to apply it. 5 Id. at 1212.

The d istrict court does not h ave the authority to i gn ore circuit court precedent, a n d n eith er d o we. “B inding authority must be followed unless and until overruled by a body competent to d o so.” Hart v. Massanari
, 266 F .3d 1155, 1 170 (9th Cir. 2001); see M iller v

. Gammie
, 335 F .3d 889, 8 99–900 (9th Cir. 2003) (en banc) ( identif y i n g the limited circumstances when a three-judg e panel of this court is not bound by our p recedent). I n Nagrampa
, w e determined that “[ t] he threshold inquiry in California’s unconscionability analy sis is ‘whether the arbitratio n a g reement is adhesive.’” 469 F .3d at 1281 (quoting Armendariz

, 6 P.3 d a t 6 9 0 )

. I n Circuit City Stores, Inc. v

. Ahmed

, we h eld that an arbitration
ag reement is n ot adhesive if there is a n opportunity to opt out of it. 283 F .3d 1198, 1199 (9th Cir. 2002); see also Kilgore

v. KeyBank, Nat. Ass’n
, 718 F .3d 1052, 1059 (9th Cir. 2 013) (en banc). Taken tog ether, these two principles compel us to find that the 2014 Ag reement, at least, is not adhesive, which supports our holding that the deleg a tion p rovision is not unconscionable.

The district court’s conclusion that the rig ht to opt out o f th e 2 0 1 3 Ag reement was illusory fares no b etter. “An

5 T h e d istrict co u rt o rd er cited sev eral o f o u r d ecisio n s, cu lm in atin g w i th Kilg o re v. Key Ba n k, Na t’l Ass’n
, 7 1 8 F.3 d 1 05 2 (9 th Cir. 2 0 1 3 ) (en b an c), ack n o w led g in g th at th e y s u

p p o rted Ub er’ s p ositio n

. Mo h a med

, 10 9 F. Su p p

. 3 d at 1 2 1 2

. No n eth eless, th e o rd er stated th at th e d istrict co u rt

“ can n o t f o llo w th e Nin th C ircu it cases cited b y Ub er in th e f ace o f d irectly

co n trad ictin g Calif

o rn ia Su p rem e Co u

rt a u t h o rity .” Id

. T h e C alif

o rn ia

au th ority cited i n th e o rd er p reced ed o u r d ecisio n in Kilg o re , so t h e co u rt’ s d ecisio n to ig n ore o u

r p reced en t can n o t b e ex plain ed b y an y in t erv en in g Calif o rn ia au th o rity

.M O H A M E D V

. U B E R T E C H N O L O G I E S 18

illusory promise is one c o ntaining words ‘in promissory form that promise nothing ’ and which ‘do not purport to put any limitat i o n o n the freedom of the alleg ed promisor.’” F lores

v. Am. Seafoods Co.
, 335 F .3d 904, 912 (9th Cir. 2 0 0 3 ) (quoting 2 Corbin on Cont racts 142 (rev. ed. 1995)). W hile

we do not doubt that it wa s m o r e burdensome to o pt out o f the arbitration provision by overnig ht delivery service than it would have been by e-mail, the contract bound Uber to accept opt-outs from those drivers who followed the procedure it set forth. There were some drive rs w ho did opt o ut and whose opt-outs Uber recog niz ed. T h us, the promise was not illusory

. The f

act that the opt-out provi s i o n w as “buried in the ag reemen t ” does not chang e this analy sis. Mohamed

, 109 F .Supp. 3d at 1 2 0 5. As w e noted in Ahmed

, “one w ho sig ns a contract is b o u n d b y its p r ovisions and cannot complain of unfamiliarity with the lang uage of the instrument.” 2 83 F .3d a t 1200 (q u o ting Madden v

. Kaiser Found. Hosps. , 552 P.2d 1178, 1185 (Cal. 1976)).

The deleg ation p ro visions w ere not procedurally unconscionable in either the 2013 or the 2014 Ag reements. B e c a u s e t h e a g r e e m e n t s w e r e n o t p r o c e d u r a l l y unconscionable, and because both procedural and substantive unconscionability

must be present in order for an ag reement to b e unenforceable, see Armendariz

, 6 P.3d at 690, we need
not r each the question whether the ag reements here were substantively unconscionable. The district court should have ordered the parties to arbitrate their d ispute over arbitrability (with a narrow ex c eption for the arg u ment over the PAGAM O H A M E D V

. U B E R T E C H N O L O G I E S 19

waiver in the 2013 Ag r eement, as discussed below), and we remand with instructions that it do so. 6

C. The effective vindication doctrine

Plaintiffs also arg u e that even if the deleg ation provisions

are otherwise e nforceable, they are invalid bec a u se both the 2013 and 2014 Ag reements contain a fee term requiring drivers to split the costs of arbitration equally w ith Uber a nd thus preclud e d rivers f rom effectively vindicating their federal statutory rig hts. Effective vindication provides courts with a means to “i n v a l idate, on ‘public policy ’ g rounds, arbitration ag r eements that ‘operat [ e]

. . . as a prospective waiver of a party ’s right to pursue statutory remedies.’” A m

. Exp. Co. v. Italian Colors Rest.
, 1 33 S. Ct. 2304, 2310 (2013) (quoting M

itsubishi Motors Corp. v. S oler ChryslerP l y m outh, Inc.
, 473 U.S. 614, 637 n. 19 (1985)). I n I tal i a n Colors

, the Supreme Court stated that effecti v e v i ndication

m a y “cover filing and administrative fees attached to arbitration that are so h ig h as to make a c c e s s to the forum impracticable.” Id. at 2310–11; see also Chavarria v. Ralphs Grocery Co.
, 733 F .3d 916, 927 ( 9th Cir. 2013) ( finding that the e ffective vindication doctrine was implicated when “administrative and filing costs, even disreg arding the cost to prove the merits, effectively foreclose pursuit of the claim”). Evidence submitted by the Plaintiffs sug g ests that the costs o f arbitration in this case may ex ceed $7,000 per day

.

6 W e n o te th at P lain tif

f s also raised t

h e arg u m en t th at th e class a n d

co llectiv e acti o n w aiv ers in t h e arb i tratio n ag reem en ts m ay v io late th e Natio n al L ab or Relatio n s A ct (NL RA ) fo r t h e f irst tim e in a su

r- rep ly

. T h at u n tim ely su

b m issio n w aiv ed th e arg u m en t. S

ee, e.g

. , Un i t ed

S ta tes v. Dreyer , 8 0 4 F.3 d 1 2 66
, 1 2 7 7 (9 th Cir. 2 0 1 5 ) (“ Gen erally , an ap p ellee

w aiv es an y

arg u m en t it f

ails to raise in its an sw erin g b rief .”).M O H A M E D V

. U B E R T E C H N O L O G I E S 20

However, U ber has committed to p ay ing the full costs o f arbitration. So long a s Uber abides by this commitment, the fee term in the arbitration ag reement presents Plaintiffs with no obstacle to pursuing v indication o f their federal statutory

r ig hts in arbitration. A s a result, we decline to reach t h e question of whether the fee term w o u l d run a foul of the effective vindication doctrine if it were enforced as written.

D. The PAGA waiver

Plaintiffs arg ue that the arbitration provisions in the 2013 and 2014 Ag r eements were invalid under Calif o r n i a law because they both c o ntained u nenforceable, unseverable waivers of Plaint i f

f s ’ claims under the California PAGA
statute

. Be cause we conclude that the district court should
not have reached the question o f whether the arbitration
ag reements were enforceable in the f i rst place, it is not necessary to address this arg ument p e r taining to the 2014 Ag reement. Plaintiffs’ challeng es to the enfor ceability a nd severability of the PAGA waiver in the 2 014 Ag reement fall to the arbitrator to decide.

As noted above, however, the 2013 Ag reement specifically required the d istrict court, and not the arbitrator,
to consider certa in challeng es to the arbitration provision, including challeng es to the enforceability o f the PAGA waiver. Because of that carve-out, it remains for us to

co n s i d e r on the merits whether the PAGA waiver in that
ag reement is e n f

o rceable, and what effect the waiver has on the arbitration provision as a whole.

The district court concluded that the arbitration provision in the 2 013 Ag r eement w a s procedurally unconscionable because it w as adhesive, oppressive, and a surprise to driversM O H A M E D V

. U B E R T E C H N O L O G I E S 21

who accepted the ag r e ement, and that it was substantively unconscionable because it contained a PAGA waiver that was unenforceable under California law. Mohamed

, 109 F

. Supp. 3d at 1217–18. The district court also concluded that the PAGA waiver was u nseverable from t h e r emainder of the
ag reement and that “the entirety of the arbitration ag reement fails because the PAGA waiver fails.” Id. at 1 2 1 8

. F o r the

reasons s t a t e d above, the district court’s holding on unconscionability

was erroneous.

Perhaps recog niz ing that th e d i s t r i c t court’s unconscionability analy sis ran counter to ex isting Ninth C ircuit precedent, Plaintiffs arg ue on a p peal that even i f t h e district court e rred in finding that the a rbitration provision in the 2013 Ag reement was unconscionable, the PAGA w aiver

was still invalid under California law and unsevera b le from the remainder of the arbitration provision under the terms o f the contract. Plaintiffs arg ue that the invalid PAGA w aiver thus dooms the entire arbitration provision, such that c laims
g overned by that ag reement (i.e., a ll o f G illette’s c laims)
must be litig ated in court. Althoug h we ag ree that the PAGA waiver in the 2013 Ag reement was invalid u n d e r California law, we c onclude that it is se v e r able from the remainder o f the 2013 ag reement.

I n I skanian v. CLS Transp. L.A., LLC
, 327 P.3d 129 (Cal. 2014), the California Supre me Court held that where “an employ ment ag reement c ompels the waiver of representative claims under the PAGA, it is c ontrary to public policy a nd unenforceable as a matter of state law.” Id. at 149. W e have held t h a t t h e F ederal Arbitration Act does not preempt this rule. Sakkab v. Luxotti c a Retail N. Am., Inc.
, 8 03 F .3d 425, 427 (9th Cir. 2015). Uber attempts t o d i s t ing uish this case from Iskanian because d rivers w ere a

b le to opt out of theM O H A M E D V

. U B E R T E C H N O L O G I E S 22

2013 Ag reement, but its e ffor t i s unavailing

. Drivers presented w i th the 2013 Ag reement were required to make the decision whether or not to opt out within 3 0 d a y s o f receipt, and Iskanian made c l ea r that, while employ ees “are free to c hoose whether or not to bring PAGA actions when they are aware of L abor Code violations,” it is “con t r a r y to public policy f

or an employ

ment ag r eement to eliminate this choice altog ethe r b y requiring employ ees to waive the rig ht
to bring a PAGA action b efore any dispute arises.” 327 P.3d
at 313. B ecause the PAGA waiver in th e 2 0 13 Ag reement required employ ees to make a decision as to whether or not they would preserve their r ig ht to bring PAGA claims before they knew any such claims ex isted, it is unenforceable under Iskanian and Sakkab

.

The PAGA waiver is severable from the remainder of the arbitration provision in the 2013 Agr eement, however. I n Section 14.1, the ag reement p rovided that “[ i] f any provision of the Ag reement is held to b e invalid o r unenforceable, such provision shall be struck and the remainin g provisions shall be enforced to the fullest ex tent under l aw.” I n Section 14.3(v), the ag reement further provided:

There will be no r ig ht or authority f o r any dispute to b e broug ht, heard, or arbitrated a s a private attorney g eneral r epresentative action (“Private Attorney General W aiver”). T he Private Attorney General W aiver shall not be severable from this Arbitrati o n Provision in
any case in which a c ivil court o f competent jurisdiction finds the Private A t t orney General W a iver i s u nenforceable. I n such instances and where the claim is b roug ht as a private attorney g eneral, such private attorney g eneralM O H A M E D V

. U B E R T E C H N O L O G I E S 23

claim must b e l i t ig ated in a civil court o f competent jurisdiction.

W h i l e t h i s provision is hardly a model of clarity

, the third
sentence stated e x plicitly that PAGA claims are subje c t to l i t i gation in court, contrary to the district court’s c onclusion that the PAGA waiver was unseverable from the remainder o f the ag reement. Fi nally

, in Section 14.3(ix ), the ag reement provided that “[ e] x cept as stated in subsection v, above, in the
event any portion of this Arb itration Provision is deemed unenforceable, the remainder of this Arbitratio n Provision will b e enforceable.” Reading these ambig uous provisions tog ether, we conclude that in stating that th e PAGA w aiver and the a rbitration provisio n a r e not severable, the contract p r ovides that, if the PAGA w aiver turned out to be inv a l i d

, the arbitration provision would als o be invalid as to any PAGA representative c laim. T hus, while Plaintiffs’ PAGA claim must be litig a ted in c ourt, the PA G A w a i v er does not invalidate the remainder of the arbitration pro vision in the 2013 Ag reement, and it should be enfor c e d a c cording to its
terms.

E. Hirease cannot compel arbitration

Plaintiff Mohamed (but not Gillette) named independent backg round-check company Hi rease in his complaint along side Uber. Hirease moved to join Uber’s motion to compel Mohamed into a

rbitration, thoug h Hirease was not identified as a party

or a sig natory to the ag reement between Uber and the drivers. The d i strict court denied Hirease’s joinder in Uber’s motion to c ompel on the same g rounds that it d e nied Uber’s motion, without separately discussing the question of whether Hirease was covered by the arbitration provisions. Mohamed , 109 F . Supp. 3d at 1237.M O H A M E D V

. U B E R T E C H N O L O G I E S 24

On appeal, Hirease a

r g ues that it should b e covered b y the arbitration ag reement b ecause: ( 1 ) Mohamed has alleg ed an ag ency relationship between Hirease and Uber, s e e , e.g. , Murphy v. DirecTV, Inc.
, 7 2 4 F

. 3d 1218, 1232–33 (9th Cir. 2013); ( 2) Hirease and Uber share an “identity of interest,”

see, e.g. , Jones v. Jacobson

, 125 Cal. Rptr. 3d 522, 5 3 7 n.9 (Cal. Ct. App. 2 011); and ( 3 ) t h e cause of a ction alleg ed
ag ainst Hirease is “intimat e ly founded in and intertwined with” underly ing contract oblig ations, Murphy

, 72 4 F. 3 d at 1229 ( quoting Kramer v

. Toyota Motor Corp.
, 705 F .3d 1122, 1128 (9th Cir. 2013)).

Hirea s e ’ s first arg ument rests on the wording o f Mohamed’s complaint, which alleg ed g enerally that Defendants—defined to include Hirease, Uber, Rasier, a nd unknown Does—knowing ly violated the F CRA, MCRA, a nd CCRAA by failing to p rovide job a p p l i c ants and employ ees with adequate notice reg arding the u s e o f their consumer credit reports for employ

ment purposes. The complaint also included a lleg ations that “each named Defendant and D OES 1–50 were the employ ees, ag ents, or r e presentatives of e ach other” and that “[ e] ach Defendant h a s ratified and approved the acts of its a g ents.” Hi r e as e a rg ues that under California law, “a p laintiff’s alleg ations of an a g enc y r e lationship
among defendants is sufficient to allow the alleg ed ag ents to invoke the benefit of an arbitra t i o n ag reement ex ecuted b y t h e i r p rincipal even thoug h the ag ents are not parties to t h e ag reement.” Thomas v. W estlake

, 1 39 Cal. Rptr. 3d 1 14, 121 (Cal. Ct. App. 2012).

As the California Court o f Appeal h as noted elsewhere, however, “[ c] omplaints i n a c t i o n s a g a i n s t m u ltiple defendants

co m monly include conclusory alleg ations that a ll of the defendants were each other’s ag ents or e mploy e es and w e reM O H A M E D V

. U B E R T E C H N O L O G I E S 25

acting w i t h i n the scope of their ag ency or employ ment.” B a r s e g i an v. Kessler & Kessler

, 155 Cal. Rptr. 3d 567, 5 7 1 (Cal. Ct. A pp. 2013). I f Hirease were c orrect t h a t s u ch alleg ations were sufficient to establish an ag ency relationship for the purpose of compelling arbitration, “in every multidefendant case in which the complaint contained such boi l e r p l ate alleg ations of mutual ag ency , as long as o ne defendant had entered into an arbitration ag reement with the plaintiff, every defendant would be able to compel arbitration,
reg ardless of how tenuous o r n onex istent the connections

am o n g t h e d efendants mig ht actually be.” Id. As such,
g ene ra l iz ed alleg ations of an ag ency relationship made in a complaint are not, by t h e mselves, a sufficient g round on which to compel arbitration w hen “the mutual a gency of all defendants is not a judicially admitted fact.” Id. at 573. There has been no such judicial admission here.

There is no specific indication of an actual ag ency relationship between Uber and Hirease, e ither in the complaint or elsewhere in the record. An ag ency relationship “requires that the p rincipal maintain control over the ag ent’s actions.” Murphy

, 724 F .3d a t 1 2 3 2

. Mohamed did not alleg e a ny facts sug g esting that Uber maintained control over Hirease’s actions, or vice versa. I n deed, while the complaint stated four causes of ac t i o n , Hirease was named in o n ly o ne of them, for a violation of the MCRA. This c laim alleg ed (1) that Hirease failed to deliver a copy of the consumer report to Plaintiff and other m em b ers of the MCRA class a s required by Massachusetts General L aws (MGL ) ch. 93 § 60, 7

7 MGL ch

. 9 3 § 6 0 req u ires co n su m er rep o rtin g ag en cies u n d er certain circu m s tan ces to :M O H A M E D V

. U B E R T E C H N O L O G I E S 26

and ( 2 ) that D efendants f ailed to advise members of the putative MCRA class of their r ig hts under MGL ch. 93 § 62. 8 H i rease’s alleg ed violation of MGL ch. 93 § 60 w a s predicated on its own failure to act, a nd there is nothing in the complaint to sug g est that failure was influenced or controlled by Uber. Nor is there any indication that Hirease h a d any role in or control over the alleg ed failure to advise members of the p utative MCRA c lass of their r ig hts under MGL ch. 93 § 6 2, whi c h applies to “user[ s] of

. . . consumer credit reports” such as Uber. B ecau s e H i rease “has presented no evidence, on appeal or before the district court, t h a t [ U ber] control l e d its behavior in way s relevant to [ Mohamed’s] alleg ations,” H irease is not entitled to compel a rbitra t i o n a s Uber’s ag ent. Murphy , 724 F

. 3d at 1233.

n o tif y th e co n su m e r o f th e f act th at p u

b lic reco rd in f o rm atio n is b ein g rep o rted b y th e co n su m er rep o rtin g ag en cy , to g eth er w ith th e n am e a n d a d d ress of th e p erso n to w

h o m su ch in f

o rm atio n is b ein g rep o rted ; or

m ain tain strict p ro ced u res d esig n ed to in su re th at

w h en ev er p u

b lic reco rd in f

o rm atio n w

h ich is lik ely to h av e an ad v erse ef

f ect o n a co n su

m er’ s ab ility to ob tain

em p l o y m en t is rep orted it is co m p lete an d u

p to d ate.

It also req u ires co n su

m er rep o rtin g ag en cies t o “ en ter i n to an ag reem en t

w ith th e us e r o f su ch co n su m er rep ort w

h ich p ro v id es th at n o co n su m er rep o rt m ay b e req u ested b y th e u ser u n til an d u n less th e u ser h as p ro v i ded

w ritten n o t ice to th e em

plo y ee o r p ro sp ectiv e em p lo y ee th at a co n su

m er rep o rt reg ard in g th e em

p lo y ee w ill b e req u ested .” Id

.

8 MGL c h

. 9 3 § 6 2 p ro v id es in relev an t p art th at “ [w ]h en ev er

. . . em p l o y m en t in v o lv i n g a co n su

m er is d en i ed o r term in ated

. . . b ecau se of i n fo rm atio n co n tain ed in a co n su m er rep o rt f

ro m a co n su

m er rep o r t i ng ag en cy , th e u ser o f th e co n s u m er rep o rt sh all

. . . n o tif y su ch co n s u m er in

w ritin g ag ain st w

h o m su ch ad v erse actio n

h as b een tak en .”M O H A M E D V

. U B E R T E C H N O L O G I E S 27

I n the same vein, th e r e i s n o indication in the complaint
t h a t U ber and Hirease share a n identity of interest, whi c h B lack’s L aw Dictionary defines as “[ a] relationship b etween two p arties who a

re so c lose that suing one serves a s notice to the other.” (10th ed. 2014). B e cause Hirease’s liability stems from its own a lleg ed vio l a t i on of Massachusetts law, independent of any actions Uber may o r may not have taken, there is no such relationship here.

F inally

, the alleg a tions Mohamed leveled ag ainst Hirease

were not “intimately founded i n and intertwined with” the underly i n g contract oblig ations established in the 2014 A gr eement. Murphy

, 724 F .3d at 1229 (quoting Kramer
, 705 F .3d at 1128). The rule requiring enforcement of an arbitration ag reement under such circumstances “ reflects the policy that a plaintiff may not, ‘on the one hand, seek to hold the non-sig natory liable pursuant to duti e s i m posed by the
ag reement, w hich contains a n arbitration prov ision, b ut, on the other h and, deny arbitration’s applicabilit y because the defendant is a non-sig natory .’” Id. ( quoting Go l d ma n v

. KPMG LLP
, 92 Cal. Rptr. 3d 534, 5 43 (Cal. Ct. A pp. 2009)). Non-sig natories c an enforce arbi t r a t i o n a g r e e m e n t s when they

are being sued “for ‘claims that are based on the same facts and are inherently inseparable from arbitrable claims,’” id. at 1231 ( quoting M

etalclad C o r

p. v. Ventana Envtl. O rg. P’Ship , 1 Cal. Rptr. 3d 328, 334 (Cal. Ct. App. 2003)), but

[ m] ere alleg ations of collusive behavior between sig natories a

nd non[

- ] s ig natories to

a contract are n ot eno u gh to compel arbitra t i on between parties w ho have not ag reed to a

rbitrate: those alleg ations o f collusive behavior must also e stablish that the plaintiff’s c laims ag ainst the n onsig natory a reM O H A M E D V

. U B E R T E C H N O L O G I E S 28

intimately founded in and intertwined with the

o b l i g a t i o n s i m p o s e d b y t h e c o n t r a c t containing the a

rbitration clause. Id. (quotin g Goldman

, 9 2 Cal. Rptr. 3d at 545). Here, the claims ag ainst H irease a

r ise under the MCRA and n ot out of oblig ations imposed by the 2014 Agr e em e nt. Therefore, the rule that an arbitration agreement c a

n be enforced b y a non-sig natory when the alleg ations ag ainst the non-sig natory a re intimately founded in a nd i n t e r t w i n e d w i t h u n d e r l yi n g c o n t r a c t oblig ations does not apply

.

III. Conclusion

W e affirm in part and reverse t h e district court’s order deny ing Uber’s motions to compel arbitration a nd remand for proceeding s consistent with this opin ion.

W e affirm the district court’s order deny ing Hirease’s joinder in the motion to compel.

All parties shall bear their own costs.

A F FI RMED in part, REVERSED in part, a n d REMANDED

.